[Congressional Record Volume 143, Number 51 (Friday, April 25, 1997)]
[Senate]
[Pages S3727-S3729]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAMS (for himself and Mr. Johnson):
  S. 652. A bill to facilitate recovery from the recent flooding of the 
Red River of the North and its tributaries by providing greater 
flexibility for depository institutions and their regulators, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.


         THE DEPOSITORY INSTITUTION DISASTER RELIEF ACT OF 1997

  Mr. GRAMS. Mr. President, I want to speak about a subject this 
morning dealing with the flood situations back in Minnesota, and North 
Dakota and South Dakota as well.
  Mr. President, as you know, over the past several weeks, towns and 
farms in Minnesota, North Dakota, and South Dakota have been battered 
by the flood waters of the Red River and Minnesota River. It is 
impossible to describe the devastation the floods are causing in 
Minnesota and North Dakota because the enormity of the damage is far, 
far beyond what anyone has ever had to put into words.
  As I made my third trip into the flood disaster area this week, 
traveling with President Clinton and my colleagues in the Minnesota and 
North Dakota congressional delegations, I found myself searching for 
adjectives but finding none that could reflect the loss and heartache 
inflicted upon our neighbors. Their lives have been shattered. Entire 
communities--homes, schools, churches, hospitals, libraries--have 
literally been washed away. Thousands of residents have no home to go 
home to, so they crowd into shelters, unsure what the river will leave 
behind when it finally releases its hold. Many cannot sleep because 
there is so much uncertainty. They cannot bathe because there is no 
running water. They cannot make plans because there are so many 
unanswered questions.

  At the moment, it does not seem like much of a life. By nature, 
Minnesotans are a stoic people. In a land where the temperatures can 
plunge to 30 degrees below zero in mid-winter and soar past a hundred 
in the summer, we have learned how to get on with life without too much 
complaining. But for many, the veneer is wearing a little thin. It is 
hard to be stoic when you have lost your home and your job. It is hard 
to look forward to tomorrow when all you have got is a cot on the floor 
of an airplane hanger, where you may be living for weeks.
  Mr. President, I am working with the Governor of Minnesota and my 
fellow Senators in the flood area to assess

[[Page S3728]]

how to address the needs of these deserving people. Part of our effort 
will be to get the funds and assistance to rebuild through the 
supplemental appropriations bill that we will pass next week. Part of 
it will be the efforts of myself and my staff to listen to the concerns 
of our constituents, and to make sure they get speedy assistance from 
the agencies that are administering the State and Federal relief 
efforts.
  I would like to announce this morning that I am opening a new, 
temporary office in Crookston, with FEMA and other members of our 
delegation, and my staff will be immediately available to help out in 
the flood relief projects that are currently underway.
  While I will be involved in many efforts to ease the suffering of my 
constituents, I am here today to introduce--with my colleague from 
South Dakota, Senator Johnson--the Depository Institution Disaster 
Relief Act. This bill will complement the other relief efforts by 
making it easier for farmers, homeowners, small businesses, and local 
governments to rebuild from the devastation brought by the floods.
  The Depository Institution Disaster Relief Act will help speed up the 
pace of recovery for the flooded farms and towns. Our legislation will 
permit homeowners, farmers, and small businesses to have faster access 
to a larger pool of credit from the banks and credit unions that serve 
their communities, by ensuring that there will be no regulatory 
roadblocks to local lending. It will permit Federal banking and credit 
union regulators to make temporary exceptions to current laws that act 
to reduce access to banks and credit unions in disaster areas. It will 
also permit Federal regulators to provide temporary relief from 
regulations so that it is easier for flood victims to get loans.
  The temporary regulatory relief offered by this bill is strictly 
limited to those counties in Minnesota, North Dakota, and South Dakota 
that have been declared Federal disaster areas. Because of its targeted 
scope and limited duration, it will permit flood victims to rebuild 
their homes, farms, and businesses without compromising the integrity 
of our banking system.
  When I served in the House of Representatives, I authored similar 
legislation in 1993 during the Mississippi River flooding. My 
legislation received bipartisan support, and was signed into law by 
President Clinton as part of the supplemental appropriations bill for 
disaster relief. Since this legislation worked well to help flooded 
communities rebuild in 1993, I will ask Chairman Stevens to include 
this bill as part of the emergency supplemental that the Senate will 
likely be considering next week. I urge my colleagues to support my 
effort.
  Mr. President, I ask unanimous consent that a summary of the bill's 
provisions be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

           Depository Institution Disaster Relief Act of 1997


                                Purpose

       Over the past several weeks, towns and farms in Minnesota, 
     North Dakota and South Dakota have been demolished by the 
     flood waters of the Red River of the North. Because of the 
     extreme level of flood damage, President Clinton has declared 
     these areas to be eligible for federal disaster relief 
     pursuant to Section 401 of the Disaster Relief and Emergency 
     Assistance Act.
       The Depository Institution Disaster Relief Act (``DIDRA'') 
     will significantly speed up the pace of recovery for the 
     flooded farms and towns. DIDRA will permit homeowners, 
     farmers, small-businesses and local governments in the flood 
     disaster areas to have faster access to a larger pool of 
     credit from the banks, thrifts and credit unions that serve 
     their communities. DIDRA will do this by permitting federal 
     financial institution regulators to make temporary exceptions 
     to current laws that (l) hamper the ability of banks, thrifts 
     and credit unions to reopen their doors to depositors, (2) 
     slow down the lending process and (3) reduce the availability 
     of credit.


                         Summary of Provisions

                      Section 1--Title of statute

       The bill is called the ``Depository Institution Disaster 
     Relief Act of 1997'' (DIDRA). This bill contains provisions 
     that are substantially identical to temporary emergency 
     relief legislation that was signed into law in 1992 and 1993.

            Section 2(a)--Exceptions to Truth in Lending Act

       The Federal Reserve Board may make exceptions to the Truth 
     In Lending Act (TILA) for loans given by a bank, thrift or 
     credit union that is in the disaster area. The exceptions 
     must be made within 180 days of enactment of DIDRA, and may 
     only last a maximum of one year. For example, this permits 
     the Federal Reserve Board to permit consumers to receive the 
     proceeds from their loans 3 days faster by permitting them to 
     sign preprinted forms that waive their 3 day right of 
     rescission period pursuant to Section 125 of TILA (15 U.S.C. 
     1635).

      Section 2(b)--Exceptions to Expedited Funds Availability Act

       The Federal Reserve Board may make exceptions to the 
     Expedited Funds Availability Act (EFAA) to any bank, thrift 
     or credit union in the disaster areas, so that they may 
     restart their check processing operations sooner. The 
     exception must be made within 180 days of enactment of DIDRA, 
     and may only last for a maximum of one year. For example, 
     this permits the Federal Reserve Board to let a bank, thrift 
     or credit union restart serving its customers even though the 
     disruption from the flooding makes it need more than one 
     business day to process cash deposits and government checks 
     as required by Section 603 of EFAA (12 U.S.C. 4002).

Section 3--Exception to the Federal Deposit Insurance Act to Permit the 
             Deposit of Insurance Proceeds in Bank Accounts

       Farms, businesses and local governments in the flood 
     disaster areas will be receiving large amounts of insurance 
     proceeds. This money will invariably be deposited in banks, 
     thrifts and credit unions for a short duration until the 
     money is used for rebuilding. Unfortunately, the depositing 
     of large amounts of insurance proceeds may cause banks and 
     thrifts to be deemed undercapitalized pursuant to Section 38 
     of the Federal Deposit Insurance Act (FDIA) (12 U.S.C. 
     1831o). This could cause credit to dry up in the disaster 
     areas, as Section 38 would automatically require a depository 
     institution to file a capital restoration plan with the FDIC, 
     even if the insurance proceeds were invested in assets 
     creating little additional risk to the depository 
     institution. Section 38 of the FDIA would compel a depository 
     institution to obtain formal approval from the FDIC in order 
     not to be restricted in its lending policies. Section 3 of 
     DIDRA permits the OCC, the Federal Reserve Board, the FDIC 
     and the OTS to subtract insurance proceeds from the 
     depository institution's assets when they calculate whether 
     the depository institution meets the FDIA's minimum leverage 
     standards (i.e., equity capitalization requirements). Any 
     exception that the regulators make to Section 38 of FDIA will 
     expire after 18 months.

    Section 4--Authority of Regulators to Act Quickly to Facilitate 
                       Recovery in Disaster Areas

       Within 180 days after the enactment of DIDRA, a qualifying 
     regulatory agency is given the flexibility to take any 
     actions permitted under its existing statutory authority to 
     facilitate recovery in the disaster area without being 
     delayed or impeded by (1) having to provide a general notice 
     of proposed rule-making in the Federal Register, (2) having 
     to hold a hearing, (3) being restricted by time limits with 
     respect to agency action or (4) having to meet certain 
     publication requirements. However, within 90 days of taking 
     an action, the qualifying regulatory agency must publish in 
     the Federal Register a statement that (1) describes what it 
     did and (2) explains the need for the action.

 Section 5--Sense of Congress re: Exceptions to Appraisal Requirements

       The Depository Institutions Disaster Relief Act of 1992 (PL 
     102-485, Oct. 23, 1992) amended the Financial Institutions 
     Reform, Recovery and Enforcement Act (FIRREA) to give 
     regulators the authority to waive certain appraisal standards 
     in disaster areas. The waiver of certain appraisal standards 
     for real estate loans in disaster areas will (1) permit homes 
     to be rebuilt faster by expediting the lending process and 
     (2) lower the cost of receiving loans to rebuild such homes. 
     Section 1123 of FIRREA (12 U.S.C. 3353) currently permits the 
     OCC, OTS, FDIC, Federal Reserve Board and NCUA to waive such 
     appraisal standards for 3 years in disaster areas.
       Section 5 of DIDRA states that it is the sense of the 
     Congress that these federal regulators should exercise their 
     authority under Section 1123 of FIRREA to temporarily waive 
     such standards.

                     Section 6--Limitation of DIDRA

       DIDRA shall not limit the authority of any federal agency 
     under any other provision of law.

                         Section 7--Definitions

       This section defines certain terms used in DIDRA: (1) 
     appropriate federal banking agency, (2) Board, (3) Federal 
     financial institutions regulatory agency, (4) insured 
     depository institution, (5) leverage limit, and (6) 
     qualifying amount attributable to insurance proceeds.

  Mr. GRAMS. Mr. President, we need to assure the people of Minnesota 
and North Dakota that the Senate stands behind them,. . . . and that 
the entire Congress and the President stand behind them as well.
  I urge swift action on my legislation and the emergency supplemental 
appropriations, which I expect will have the overwhelming, bipartisan 
support of my colleagues when it comes to the floor.
  Minnesota Governor Arne Carlson and his staff have been here in 
Washington these past two days, working

[[Page S3729]]

with my staff and that of my colleagues to ensure Federal officials are 
doing everything in their power to help our residents put their lives 
back together.
  Director James Witt and his team at FEMA have been outstanding. I can 
say with confidence that everyone here understands the gravity of the 
situation and the magnitude of the work that remains.
  Mr. JOHNSON. Mr. President, today I am proud to be an original 
sponsor, along with my colleague from Minnesota, Senator Grams, of the 
Depository Institution Relief Act of 1997. This act represents a small 
measure that we in Congress can undertake to help alleviate some of the 
suffering caused in South Dakota, North Dakota, and Minnesota by the 
natural disasters of this past winter and spring.
  South Dakotans are a hearty stock, and during my years serving the 
people of South Dakota, I have repeatedly witnessed their ability to 
overcome any obstacle Mother Nature throws their way. However, I don't 
believe I have ever seen South Dakotans rise to the occasion in quite 
the manner they are right now. I recently toured the disaster areas of 
South Dakota, North Dakota, and Minnesota with both President Clinton 
and Vice-President Gore and viewed terrible scenes of cattle stranded 
in fields, dead cattle across the area, flooded highways, communities 
lining up to pile sandbags, and people forced to stay in motels because 
their homes are in such danger. The devastation caused to Grand Forks, 
ND will not soon be forgotten by those who witnessed nature's awesome 
fury first-hand. The situation in South Dakota also was far worse than 
I expected. During my recent tour, I saw a compelling combination of 
the furor of Mother Nature and the determination of South Dakotans, 
North Dakotans, and Minnesotans to survive yet another battle with this 
awesome force. Mother Nature--as only she can do--had changed the rules 
of the game and given the residents of our region more water than 
initially anticipated and more than we could safely handle.
  But, through it all--through all the heart-wrenching, indiscriminate 
loss of property, possessions, and livestock--folks in our South Dakota 
communities have pulled together. The scene in my home State, and 
across the region, is something that nearly defies description, but 
clearly will not be forgotten for many years to come. As the flood 
waters begin to recede, and these hard-working folks begin to rebuild 
shattered lives, I rise to seek the support of my colleagues in 
providing certain regulatory relief that will greatly enable this 
process. As we did in response to previous tragic flooding along the 
Mississippi River in 1992 and 1993, let us now undertake to do for the 
residents of South Dakota, North Dakota, and Minnesota through the 
Depository Institution Disaster Relief Act of 1997.
  This act will enable lending institutions--banks, credit unions, and 
thrifts--to help the people most severely affected by this disaster to 
begin the arduous process of recovery. The bill permits the regulatory 
agencies to waive some of the regulations which delay the procedures 
for helping these people. The major provisions will allow consumers to 
receive loan proceeds 3 days faster than they ordinarily would, helps 
lending institutions reopen for business quicker even though the 
disruption from the flooding may require more than 1 day to process 
cash deposits and government checks, and loosens capitalization 
requirements that will be buffeted by the large amounts of insurance 
deposits that will shortly be flowing through the region. We also call 
upon Federal regulators to use their ability to waive certain appraisal 
standards for real estate loans in the disaster areas. These actions 
will enable the regulating agencies to work with the primary lending 
institutions to make it easier for the impacted citizens to begin the 
strenuous and extremely difficult process of recovery.
  Mr. President, my region has just suffered a 500-year flood right on 
the heels of the worst winter in memory. As the valiant residents of 
South Dakota, North Dakota, and Minnesota begin to rebuild their lives 
and homes, I urge the Congress to take these minimal steps to help that 
process.
  The Depository Institution Disaster Relief Act of 1997 represents an 
immediate, concrete step we can and should take in that direction. I 
urge my colleagues to support our efforts to attach this important 
disaster relief bill to the supplemental appropriations bill which will 
be considered by the Senate in the near future.
                                 ______